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Investment glossary

Use this glossary of key investment terms to make choosing an investment a little simpler.


An annual payment/receipt. Normally used to provide a retirement income.

Asset class

The asset class is what the money from your investment is actually put into, e.g. shares, bonds, property and cash deposits.

Base Rate

The interest rate set by the Bank of England.

Blue chip

An informal term used to refer to leading companies on the stock market.


An agent who acts as an intermediary between buyers and sellers, usually for payment of a commission.


The money you initially invest.

Capital growth

This is any increase in the original amount you invested, after costs, charges and depreciation.

Compound interest

This is the cumulative effect of earning interest on your savings and leaving your interest in the savings account.


A payment made to shareholders/unit holders from a company/investment group.


A payment made to shareholders/unit holders from a company/investment group.


Another name for shares.


An increase in the level of prices of goods and services in the economy. It is measured by examining a typical basket of goods and services.

Liquid asset

An asset that can be quickly, easily and inexpensively turned into cash.

Open Ended Investment Company (OEIC)

A type of pooled investment fund, open ended investment funds can create new shares or cancel existing shares in issue.

Ordinary shares

A class of share usually associated with UK stock market investments. Shareholders have the right to receive distributed profits and vote at annual general meetings.

Paper loss

Also known as unrealised loss, this is where an asset or investment has decreased in value before you come to cash it in, i.e. your investment is worth less ‘on paper’.


In simple terms this is an income plan for income to be taken in retirement.

Personal allowance

The amount of income an individual can earn free of tax.

Pooled investment

Many people putting their money together into a single investment fund.


A collection of investments that can include any or all asset types.

Tax wrapper

Tax breaks that an investor can ‘wrap’ around their investment, so that they can are sheltered from paying some or all tax on it. The most common tax wrappers are ISAs and pensions.

Unit Trust

A pooled fund that is established under trust.